One of the most surprising things about Microsoft's bid for Yahoo is that if successful it will make Microsoft one of the two or three largest users of open source software in the world. Google is certainly the largest. The National Security Agency may or may not be second (only the spooks know for sure), but if it is then by my estimate that would make Yahoo the third.

Indeed, without going into details, I can testify that Yahoo! does use other open source stuff on grids beyond what was mentioned in the article, and it's being developed in Microsoft's backyard (Bellevue). Just search all the Yahoo! job listings to get a clue

People seem to think this is about technology, and about rather vaguely worded ambitions or market movements. Its not. Its particularly not about stuff like 'the search market'. It is only about money and management, ie non technical things, and stuff about markets which is highly quantified. Trying to think about it in the vague ways the financial and market aspects are approached in technical quarters is about as useful as trying to think about Perl versus Python in terms of how high level either language is.

What matters is first how much you pay. If you pay as much as MS is proposing to, there is no way to get returns on it.

It is second about management. Acquisitions are never the solution to a strategy problem. When you find a management team drifting into behaving as if they are, you know they are intellectually bankrupt. They have handed themselves over lock stock and barrel to the investment bankers. They will end up unable to walk away from the deal even as the terms worsen to the point of madness. The investment bankers and consultants will just tweak the spreadsheets for them until the savings estimates and earnings forecasts to justify these terms move into the stratosphere.

I have never been able to decide if the advisers actually believe these spreadsheets. Is it hysteria or is it deception? Doesn't matter, the consequences are equally disastrous.

MS has no strategic problem for which the acquisition of Yahoo at this price is a solution. To call a problem strategic by the way is like calling a car red. We still want to know, is it a Ford, is it a saloon. The same with problems. Its strategic is like saying its big, or international. It doesn't say anything about what it is or what to do about it.

What will happen? It will be the beginning of the end of MS. First, they will pay even more than is now proposed. Second, they will find themselves with an all consuming management problem which they are unequipped to handle. They have no idea what to do with Yahoo - I mean, specifically what actions to take in week 1. Not some sort of vague rambling about synergies. Third, all of the problems they currently have with maturing markets, increased competition and difficulty of finding new revenue sources and growth, will continue, but they will be worse because of the huge distraction. Fourth, they will have to confront these problems having lost their enormous cash cushion.

What should they do? Give the money back to the shareholders, focus on the core business, if that is in harvest and maintenance mode, if they have become more or less a utility, fine, accept it, manage it the best way you can.

But you can be sure anyone who has ever said that at MS is now sitting in a very cold office somewhere well north of the arctic circle. One with no phone.

> What should they do? Give the money back to the shareholders, focus on the core business

I don't necessarily think it is a good buy, but you're off the mark here. In the world of big business (and microsoft is as big as they get), the only use for money is to make more money. Putting it in the bank so that they can continue to make Windows and Office through thick and thin for the next 1000 years is not what their shareholders are interested in them doing. They want more money, more greedy money, and they want it now.

Microsoft already has all their core businesses staffed and funded. Doubling (or more) the appeal of their advertisement business by buying another third of the internet might just be a better deal than collecting interest on 40B.

What should they do? Give the money back to the shareholders, focus on the core business

I don't necessarily think it is a good buy, but you're off the mark here. In the world of big business (and microsoft is as big as they get), the only use for money is to make more money. Putting it in the bank so that they can continue to make Windows and Office through thick and thin for the next 1000 years is not what their shareholders are interested in them doing. They want more money, more greedy money, and they want it now. "

True. And that is a big problem for Microsoft, but not one that buying Yahoo! can solve. For that matter, the GP is right - the best way to achieve the goal you mention is to give the money back to the shareholders so they can take the money elsewhere to be invested. That's really the only way that Microsoft can produce more money with the money they bring in.

They've already shown they are not able to create new products. They've been showing that for nearly 15 years.

Microsoft already has all their core businesses staffed and funded. Doubling (or more) the appeal of their advertisement business by buying another third of the internet might just be a better deal than collecting interest on 40B.

True, their core business (Windows, Office) is funded and currently self-sustaining. However, they have a very big issue right now (OOXML) that has the potential to derail that. Additionally, everything else depends on the income from Windows and Office.

This definitely wouldn't be as stupid as the AOL Time Warner merger.

No, it would be make the AOL-TimeWarner deal look like the brightest idea in history. It is certainly a very, very stupid idea.

I couldn't say myself whether you are right, but the guy at MiniMSFT is probably crapping bricks. I guess he'd be doing so in private though as his blog remains rather even keeled in the wake of the announcement. hah two nautical figures of speech in one sentence.. Now my raccoon like (easily distracted: shiny!) brain is left wondering how many of those are in common usage. And I'd better hit the hay.

You gave an interesting perspective. But, I think you underestimate Microsoft.

You also sound reminiscent an employee of Yahoo! who is not too happy about the prospects ... can't say that I would blame a Yahoo! employee for that.

Now my perspective: Microsoft is all about control and mindshare. It's hard to put a price on that. But, they know that if they have it, they are golden. Just look at the Office document format wars. Using someone else's format is just not an option for Microsoft. The whole thing is like sacrificing your Bishop in a Chess game to get your opponent's Queen. While you and I are probably too narrow minded to see Microsoft's big picture, I think they know what they are doing.

While MS has a excellent track record at buying out technology or just bully their apps into new markets meaning they usually know how this works I think they are wrong with this Yahoo business except their plan is that Google steps in with a counter offer and let Google bleed money for it.
Yahoo is a troubled company and so is MS - at least in the 'web 2.0' business.
So you combine two loosers to create a winner?
Don't think so.
To make matters worse this whole thing stinks of personal vendetta Ballmer vs. Google.Never good to let your personal vendettas in the way of business unless there is a compelling reason other than antipathy.
If you'd have to spent 40 BN $$ would you buy Yahoo??

I personally hope the acquisition does not go ahead for the sake of open source and for the sake of Microsoft (yes for their sake too). Giving so much power to one company may create serious concqeuences. If things turn bad for MS, it will be the end for Microsoft and I don't want that as I like the copmany however if things turn ok for MS, you never know what they will do. Although, I like their products (thus the "I like the company"), I dislike their business practises bad. Things should stay the way they are and things will be balanced, the way things should be. Now, don't get me wrong, just because I said I like the company, it doesn't mean I hate Linux, in fact, I dual boot to mostly KDE distrubutions. I don't want Microsoft to get more power than what they already have. Put it this way, if they end up buying Yahoo and things turn bad for MS, they deserve it. Why? Greedy people are never satisfied. Power..power...more power, they end up with nothing. If this thing goes ahead, the first thing that will happen is companies will start suing Yahoo, if Yahoo violates patents etc but currently they don't sue them because they like Yahoo.

The largest user's of Open Source in the world as always been Microsoft. Followed closely by Apple. Where as Google is the second largest user of Free software behind GNU/Linux.

Open Source is not software or a licensing method , it's a method of development. The problem is with the license used by Microsoft and Apple who don't allow for closing and license switching but not any of there major user's as had the gut's to enforce the license in court VS the two lawyer crazy behemoth.

Anyone with half a sense in IT technology can trace back both all Microsoft and all of Apple technology to something Open Source that got closed and licensed switched in the derivative they made.

That behing said most ignorant people are looking at what Microsoft as that Yahoo as too and are falsely concluding that it's technology and number of user's is superior to what Yahoo as in the same category.

Yahoo with it's online service and mobile service is vastly more popular then Microsoft is. Google and Microsoft search usually will give you in there first link on many request as most popular the properties of Yahoo. Yahoo is more localized too.

Ebay as one major competitor in Japan and Asia , guess who it is.

That behing said Microsoft is more interested in what Yahoo as that they don't and the technology that Yahoo as acquired and developed but don't seem to be able to market properly.

Anyone who's good at math can clearly see that Yahoo share price is not at all related to the actual worth and size of the company.

This acquisition is similar to when Nvidia bought 3dfx , Microsoft is buying a bigger , better , stronger , more diversified , more popular company on the cheap , because most people are looking at some minor problems and the stock price instead of the real number's and worth of the company.

The thing I would not be surpized to see is Google jump in the bidding game just so that Microsoft do not get Yahoo on the cheap and an advantage in the Chinese market due to pure luck of acquisition that Yahoo made there in the past.

Open Source is not software or a licensing method , it's a method of development.

Open Source is a trademark which is owned by the Open Source Initiative. They have rules about who can and can not use their trademark. Microsoft only qualify when they use the Ms-PL & the Ms-RL licenses.

Open source is a development method for software that harnesses the power of distributed peer review and transparency of process. The promise of open source is better quality, higher reliability, more flexibility, lower cost, and an end to predatory vendor lock-in.

The Open Source Initiative (OSI) is a non-profit corporation formed to educate about and advocate for the benefits of open source and to build bridges among different constituencies in the open-source community.

One of our most important activities is as a standards body, maintaining the Open Source Definition for the good of the community. The Open Source Initiative Approved License trademark and program creates a nexus of trust around which developers, users, corporations and governments can organize open-source cooperation.

Don't let reality and the truth once again come in the way of your personnal attacks ...

Don't let reality and the truth once again come in the way of your personnal attacks ...

You know, that's funny, you're the second person to accuse me of "personal attacks" when I call them out as being a troll. Oh I remember now, that's in the "How to troll Slashdot" handbook written by spiralx. It's quite useful that isn't it?

Your fixation on one single word , inside a clear definition of many paragraphs is pathetic , it shows a real lack of inteligence and of understanding on your part. It's quite clear you have nothing to contribute to the dicussion and subject at hand.

You need to figure out , that your not on slashdot and that calling people troll , anywhere , only serve to show that you lack the capacity to express your opinion on the subject being discussed. Since you have nothing interesting and of value to offer about the subject , and you intent is clearly to be insulting , harrassing and disruptive and off topic , this is my last reply to you in this thread.

Your fixation on one single word , inside a clear definition of many paragraphs is pathetic , it shows a real lack of inteligence and of understanding on your part. It's quite clear you have nothing to contribute to the dicussion and subject at hand.

You've hurt my feelings now. You're right, I have no idea what Open Source is. Nor Free Software. I'm glad that yourself and Almafeta there are around to fill me in on the meaning of those tricky terms.

You need to figure out , that your not on slashdot and that calling people troll , anywhere , only serve to show that you lack the capacity to express your opinion on the subject being discussed.

Although I'm not sure your comments negate many of the points in the article, I do partially agree with you on this:

Anyone with half a sense in IT technology can trace back both all Microsoft and all of Apple technology to something Open Source that got closed and licensed switched in the derivative they made.

As I understand it, the Windows TCP/IP stack was taken from FreeBSD, along with an ftp client and who knows what else. Mac OS X? Direct descendant of FreeBSD.

Both MS and Apple are huge open source users. That doesn't necessarily mean they play nice and contribute back (which they should do), but closing the source code and reselling in binary form is not in violation of the license.

Anyone with half a sense in IT technology can trace back both all Microsoft and all of Apple technology to something Open Source that got closed and licensed switched in the derivative they made.

As I understand it, the Windows TCP/IP stack was taken from FreeBSD, along with an ftp client and who knows what else. Mac OS X? Direct descendant of FreeBSD. [/q]

There's no FreeBSD code in Windows' network stack. The TCP/IP in NT 3.1 stack originally came from Spider. It was based on older BSD code, but not FreeBSD. And then it was re-written from scratch by MS for 3.5. And then again for Vista.

Some TCP/IP utilities in Windows (ftp.exe for example) are based on BSD code, but what's the problem with that?

Some TCP/IP utilities in Windows (ftp.exe for example) are based on BSD code, but what's the problem with that?

Not sure what you're implying -- I didn't say anything about a "problem". Like it or not (I happen to like it), the BSD license has been very effective in getting its code into far-reaching systems and environments that would have been prevented by stricter licensing.

Perhaps there is a technology angle. For the past decade or so, the most interesting web-based technology has been open source. Microsoft has done some catch up with its .NET technology and IIS web server, and pulled out ahead in ease of development, but always at the cost of inflexibility - they make the easy 80% trivial (which makes the sales), and the remaining 20% nothing but a headache.

In contrast, Java-based open source development has produced very advanced object-relational mapping, unit testing, build systems, distributed computing systems, and a variety of web frameworks each getting incrementally closer to being both straightforward to use and scalable/flexible in ways that Microsoft's offerings aren't. Also non-Java software, but I'm mentioning Java because of its similarity to .NET.

It's possible that the technical people at Microsoft see the open-source world as pulling ahead in some key areas which Microsoft can't compete with, because it would require discarding it's existing developer infrastructure, and the compatibility with it, to develop something from the ground up without all the existing baggage (this is something open-source does twice before breakfast - Struts, Spring, Tapestry, etc. all climb over each other, until all the good ideas congeal and you get newer, more effective frameworks like Wicket and GWT).

Rather than follow the not-invented-here syndrome, it's possible that Microsoft management has decided that the best strategy might be to port the most successful Java open-source software to .NET (in the same way that NAnt and NHibernate were ported, though not my Microsoft), in order to "grow the ecosystem" as happened for Windows. By supporting third party developers, it increased Windows sales even though Microsoft doesn't provide or control most Windows software. It may intend to do the same with open source software on .NET (they're already implementing Python and Ruby interpreters, both open-source developed languages). The goal is to eliminate the advantage that Java has in areas Microsoft is weak in, and make .NET an option where it wasn't before.

To do this, purchasing Yahoo makes sense, in that they can fund this porting effort (step by step) and have practical experience using it. It might also take the oxygen out of Java open-source development, enough for Microsoft to catch up (I doubt that would actually happen, but Microsoft management might be hoping it would).

This is certainly a long term strategy, but Microsoft is rare in that it tends to think long term - sometimes too much, which is why so few products are actually profitable and so many are late, there is just no short term pressure to succeed.

Java-based open source development has produced very advanced object-relational mapping, unit testing, build systems, distributed computing systems, and a variety of web frameworks each getting incrementally closer to being both straightforward to use and scalable/flexible

This is a attempt at trying to catch Google and the web, nothing else. They've lost to Google on this front and the only way to TRY and win is buy up Yahoo.

If Microsoft can't make good products they either FUD of the market and competition or buy them up to get the share. If this puts Microsoft in the red then so be it but if they fail, it's their own fault because of pure greed. The economy is not looking good at the moment, I just think it's a bad move ,they will need all that cash when people stop buying computers and the economy drys up.

Microsoft needs to focus on creating a proprietary operating system. This is their core competency. As much as I love open source, MS has the opportunity to excel at what open source doesn't, and that is quickly producing polished and integrated products. They have so much cash, if they eliminated their management problems, they could recreate an entire open source ecosystem within the walls of the company, and pay their developers four times as much. But NOOO they make their developers feel second-class and put the pointy-hairs, lawyers, and marketers on a pedestal.

Imagine if we had two strong examples of development models: MS, committed to their proprietary software-as-product model, and open source, committed to free software and services around that.

Open source scales best with scientific passion, Closed source scales best with money.

I'm not for MS closing protocols, or specifications even, but with all their cash, why can't they make a kernel that screams, a runtime that blows the crap out of the JVM, and amazing scripting languages that do cartwheels around what's existing? Sure, close the implementations, sell them as a product. Make open source forever play catch-up to the elite "evil" of your products. Embrace your role as Empire of the Dark Side of the force, we'd be down with that!

They play this role well already ... they don't need to play dirty, they just need to be COOL evil. Not this lameness you often get from them trying to run around in too many directions.

Cut off all these other divisions, MS, and focus on your money-makers.

Most people seem to agree that this deal wouldn't benefit Microsoft much. Also, it's quite a public announcement of a 'bid' (not so much their usual style), and then Yahoo's "we're not sure if we'd like to accept". Also, for a realistic bid, why start so high? I suspect that it serves to perhaps scare Google (?) or serves a PR purpose somehow. I wouldn't be surprised if there was a secret deal with Yahoo management that this offer will NOT be accepted. Maybe they are hoping that Google will make the mistake of jumping in? I think that's too far fetched though. Maybe it's some people making some extra cash on the stock market by this announcement??